A government change to the way pension credits are paid out could mean more than 60,000 mixed age couples could lose up to £10,000 a year.
Research by the Pensions Policy Institute (PPI) has revealed that the income for mixed age couples on low incomes could be slashed by up to 45%.
Pension credits used to be available to anyone reaching state pension age, irrespective of the age of their partner.
But a new ruling announced by Pensions Minister Guy Opperman means anyone with a partner under the age of 65 will no longer be entitled to the benefit.
Working age benefits
In future around 60,000 pension age partners will not have to claim working age benefits alongside their younger partners.
PPI senior policy researcher Mark Baker said the Department for Work and Pensions (DWP) expects the mixed age couples to claim the controversial Universal Credit – a benefit which he said ‘was designed solely to encourage working age people to find and increase paid work, and was never intended for pensioners to claim’.
He added: “As a result, mixed age couples receiving universal credit are very likely to be significantly worse off than those claiming pension credit.”
Incomes under the two different benefits are markedly different. A couple on pension credit would receive a minimum guarantee of £255.20 a week while one receiving Universal Credit could expect just £115.13.
The PPI research added that ‘pension credit can provide access to other sources of social security income that Universal Credit doesn’t’.
The government expects to save £1.1 billion between 2019 and 2024, but it has been challenged by a group of MPs who want the decision reversed.
Independent MP Stephen Lloyd said: “Much has been done in recent years to address the issue of pension poverty, with the pensions triple lock and the pension freedoms, but these changes are a backward step and, frankly, a disgrace.”
Caroline Abrahams, director of Age UK, commented: “It’s not at all unusual for one partner to be older than the other so lots of older couples on low incomes could be affected by this policy change without even knowing it yet. There is no doubt in our minds that many unsuspecting pensioners will face a heavy financial penalty for having a younger partner and this will undoubtedly affect the health and wellbeing of many of those couples.
“We are deeply concerned that benefits designed to support exactly these type of people are being abolished without fully understanding the impact on older people’s lives.
We urge the Government to look again at the implications for the poorest pensioners and reverse its decision.”